"Big Banks" UBS: CATL's advantages in cost and technology assist multiple growth opportunities, target price raised to 660 yuan

UBS published a report indicating that its 2026 battery teardown report covers CATL (03750.HK) including the Shenxing supercharging battery and Kirin battery, and found that the group maintains a cost competitive advantage in both domestic and overseas production. Based on the teardown results, it is estimated that the cost of similar batteries produced by CATL in Hungary may be 10 to 15 USD/kWh higher than those produced in China, but it is expected that the operating profit margin of the Hungarian factory will be similar to that of domestic factories. The report believes that the group's leadership in global costs, scale, and technology allows it to benefit from multiple growth opportunities as the electrification process accelerates in electric vehicles, energy storage systems, and new application fields.

UBS predicts that the cost curve of CATL's factory in Hungary will be lower than that of Germany and forecasts that the operating profit margin of its Hungarian factory will generally remain consistent with domestic operations, mainly due to the European market premium, highly automated production, and only moderately rising labor costs. With a leading and continuously growing global market share, it is believed that the group is best positioned to benefit from the deepening global penetration of electric vehicles, the acceleration of commercial vehicle electrification, and the expansion of applications such as energy storage systems, data centers, and robotics; it forecasts a compound annual growth rate of 20% and 25% for the group's revenue and profit, respectively, from 2024 to 2029.

UBS also raised its battery sales forecast for CATL for the next two years by 5% to 7% to 829 to 1,044 GWh, and raised its net profit forecast by 5% to 7%, based on an unchanged price-to-earnings ratio for 2026, with the target price raised from HKD 640 to HKD 660; rating "Buy."